Q&A: Interest and a Heter Iska
Originally published:
This is an English translation (via GPT-5.4). Read the original Hebrew version.
Interest and a Heter Iska
Question
Hello,
What is the Rabbi’s view regarding loans from the bank nowadays (and even for business purposes)? Seemingly, the interest is the bank’s share in the profits, but in practice, the borrower is required to pay it even if the business does not succeed.
Thank you.
Answer
I can’t say clearly. It is clear that a heter iska from a bank is a legal fiction. On the other hand, in my opinion the prohibition of interest itself in the case of a bank is also not clear (I wrote about this on the site), so there is room to rely on such legal fictions.
In Rabbi Wind’s heter iska (he has a halakhic hotline/instruction center for interest: https://bhribit.com/; he also has responsa there, and he’s available by phone too, and explains at length in a thorough and clear way), they use a better trick. The borrower transfers ownership to the bank of a share in his home, and for the use of that share he pays the bank the “interest.”